Global equity markets ended mostly higher last week. UK markets ended the week in positive territory, as the British Pound weakened, amid ongoing Brexit concerns and disappointing retail sales data. On the data front, UK’s consumer price index (CPI) rose less than market forecast on an annual basis in June. Further, the ILO unemployment rate remained unchanged at its lowest rate since 1975 in the three months to May. Additionally, average weekly earnings recorded a steady reading in the March-May 2018 period, meeting market expectations and recording its slowest increase since November 2017. Moreover, the annual house price index advanced less-than-expected in May, marking its lowest rate since August 2013. Furthermore, retail sales unexpectedly fell on a monthly basis in June. European markets ended mostly higher last week. Data indicated that Euro-zone’s annual CPI climbed in line with market expectations in June. Moreover, monthly construction output advanced for a second consecutive month in May. On the flipside, current account surplus narrowed in May, recording its lowest level since March 2015. Additionally, trade surplus unexpectedly narrowed in the same month. Separately, Germany’s producer price index (PPI) rose in line with market forecast on an annual basis in June. US markets ended the week in green, after the US Federal Reserve (Fed) Chairman, Jerome Powell maintained a positive outlook for the US economy and following upbeat corporate earnings. On the macro front, the US monthly manufacturing production climbed more than market forecast to a four-month high level in June. Additionally, industrial production advanced more-than-anticipated on a monthly basis in the same month. Moreover, initial jobless claims surprisingly fell to its lowest level since 1969 in the week ended 14 July 2018. Further, advance retail sales climbed for the fifth consecutive month in June. Meanwhile, the nation’s housing starts declined to lowest level in nine months in June. Additionally, monthly building permits recorded an unexpected fall in the same month. Asian markets ended weaker last week, amid ongoing geopolitical trade tensions.

Currency Update

The EUR ended firmer against the USD, after the Eurozone’s annual inflation rose at par with the market expectations in June. The British Pound ended weaker against the greenback, after the European leaders rejected British Prime Minister, Theresa May's latest Brexit proposal. The US Dollar ended mostly weaker against its major counterparts last week, following the US President, Donald Trump’s comments over the Fed’s gradual interest rate hike policy.

Fed Chairman, Jerome Powell, in his testimony, presented an upbeat assessment on the US economy. Further, he indicated that economic growth in the second quarter was “considerably stronger” compared to the first quarter and hence signalled a “gradual” pace of interest rate hikes. Additionally, he projected that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2% over the next several years.